BT sees challenging Q1 but beats the heat to ‘smash’ network development objectives

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BT Group claims to have has made a good start to the year in its first quarter, returning to revenue and Ebitda (earnings before interest, taxes, depreciation and amortization) growth, even if they only inched up.

The financial report for the quarter ended 30 June 2022 showed that BT Group revenue inched up by 1% on an annual basis to £5.1bn, due to improved pricing and trading in its Consumer and Openreach divisions driving adjusted Ebitda of £1.9bn, up 2% primarily due to flow through from revenue and cost control. Reported profit before tax was £500m, down 10% annually because of increased depreciation offsetting Ebitda growth.

A reported enterprise revenue decrease was primarily due to challenging market conditions in large corporates, ongoing legacy product declines and the migration of a wholesale mobile virtual network operator (MVNO) customer that concluded in FY22. Enterprise Ebitda decreases were also as a result of a reduction in revenue, with the mix of revenue driving a further downside.

BT’s enterprise SoHo and SME segments saw revenue and Ebitda growth, with retail order intake of £2.6bn on a 12-month rolling basis, down 8%, with growth in new business offset by a decline in contract re-signs. Wholesale order intake was £1.0bn, up 8% on an annual basis.

The company also concluded an agreement to extend the existing MVNO agreement with Telecom Plus (UW), and Sellafield has awarded a major new contract to BT for managed network services

BT’s continued fibre build and connection growth in Q1 were beyond expectations, said the company, with the quarter showing a record quarterly fibre-to-the-premises (FTTP) networks build of 763,000 and net adds of 302,000. The company’s reported capital expenditure was down 17% to £1.3bn, mainly due to increased investments on the build and provision of FTTP networks, in addition to cost inflation.

Q1 2022 investment compared badly to the previous year quarter, which saw huge mobile spectrum purchases. Capital expenditure excluding spectrum payments rose by 24% on an annual basis to £1.3bn.

Commenting on the Q1 2022 results, BT chief executive Philip Jansen said: “The modernisation of BT Group remains on track. We are delivering, and notwithstanding the current economic uncertainty, we remain confident in our outlook for this financial year.”

And just as the results were being rolled out, BT CTO Howard Watson said the incumbent UK telco remained on track to deliver on the promises made a year ago in its Network Vision.

The operator believes the near future will present even more challenges, but Watson gave an assurance in a blog post that the company will always strive to keep everyone connected. Network Vision promised that by 2023, a new smart core technology would be powering the BT network and that two years later it would provide 4,500 square miles of new rural mobile coverage, with a 5G connection possible anywhere in the UK by 2028.

“Our eyes are on the promises we made last year, delivering a seamless connection wherever it is needed, fuelling innovation and being a major contributor to the UK’s economic growth,” said Watson. “In the future, your calls should never drop and your journeys – however remote – are never out of reach of a connection.”

Looking at the current BT scorecard and how it measured up to the company’s stated ambitions, Watson said that as regards its EE 5G network, the company had “smashed” its first target on 5G, becoming the first operator to pass 50% of the UK population. The BT results showed the company’s 5G ready base now stood at 7.7 million.

“We are growing further, adding new sites every day while making sure that EE’s 5G has the mark of quality too,” he said. “We are also bolstering 5G in the nation’s busiest spaces – tourist hotspots, stadiums and university campuses. EE customers at Glastonbury took for granted their ability to upload their memories – but ask friends on other networks whether they had the same experience.”

Watson also revealed that BT had now launched its new 5G core is and it would go fully live in 2023, as planned, successfully migrating the first customers onto it, which he regarded as a critical milestone. He added that by embedding both its mobile and fixed core networks in BT’s private network cloud, the company would be able to deliver ever better customer experiences. Such changes were also seen as being critical to fusing the power of multiple networks and critical for the future launch of 5G standalone services.

While he was keen to emphasise the developments being made in the 5G arena, Watson also pointed to the work that EE had been doing to enhance its 4G network, which he described as the bedrock of the company’s current infrastructure.

Turning to fibre, Watson noted that across the UK, demand for connectivity was rising – for access to it, for speed on it, for reliability within it and for performance over it. “Fibre is the solution and we are literally embedding our future connectivity throughout the highways and byways of Britain, week in, week out,” he said. “Best of all, expanding fibre strengthens our mobile network.

“Nearly 4,500 of our mobile sites now connect over 10Gb fibre connections, giving them ‘best in class’ performance, now and into the future. Many networks are built to deliver peak speeds in a few areas. Ours is built to deliver peak performance more widely – delivering industry leading speeds to customers beyond just the busiest cities.”

Watson pinpointed delivery as an issue during the recent heatwave that saw the UK bake in record temperatures while BT’s infrastructure kept its cool. “Our datacentres, exchanges, routers and major mobile sites continued connecting customers’ calls – in some cases delivering life-saving connections – and our teams worked quickly to tackle any local issues where they arose,” he said. “Like many, I am concerned by our changing climate, but I am also extremely proud of how BT’s infrastructure stood up to a fierce test.”



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